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BNSF Sued for Millions by Former Cold Train Executives

(The purveyor of this website has written off and on for decades about railroads hauling produce. More specifically, stories about how the rails often lacked an understanding of perishables transportation, as well as not making it a priority. If the following lawsuit has merit this could prove to be another example of the risks involved in transporting perishable fruits and vegetables by rail.)

A multi-million dollar federal lawsuit against BNSF Railway Co., blaming the railroad for the failure of the refrigerated rail service for fresh produce has been filed by Steven Lawson, former president and CEO of Cold Train, and Mike Lerner, former managing member of the company. Both claim they had to shut down their rail service for fresh produce because BNSF failed to meet its promise for 72-hour delivery times.

Seeking $1 million in damages, the case was filed in federal court in Spokane, WA recently.

The lawuit alleges that the 72-hour “on-time percentage” steadily dropped from 92% in August 2013 to 3% in April 2014 because BNSF was favoring oil and coal over fresh produce in its scheduling. This resulted in Cold Train losing most of its fresh produce business, including apples, onions, pears, potatoes, carrots and cherries, which was more than 70% of the company’s business, the complaint alleges.

“The shutdown of Cold Train was caused by a significant slowdown in BNSF’s service schedules on its northern corridor line beginning in the fall of 2013 because of increased rail congestion as a result of BNSF hauling larger volumes of oil and coal from the Northern Plains region,” according to the April 7 news release.

A spokeswoman for the railroad said as of April 8 BNSF had not been served with the complaint and therefore its officials could not comment on specific allegations.

“BNSF did experience well documented service issues following unprecedented demand levels and historic winter weather events beginning late in 2013, but we worked to remedy those situations and regularly communicated with our customers throughout the period so that they could anticipate when service would improve and plan accordingly.”

Cold Train shipped approximately 300 containers a month in 2011, according to the release. By 2013 it was shipping 700 per month with a goal of 1,000 per month by the end of that year. BNSF required the Cold Train to acquire a minimum of 111 refrigerated containers.

“BNSF also required the Cold Train to ship a minimum of 95% of the Cold Train’s entire container movements with BNSF, effectively prohibiting the Cold Train from using other carriers,” according to the news release.

By May 2012, Cold Train had 175 containers in service with another 100 on order for delivery in January 2013. Cold Train continued to purchase and lease containers, and by September 2013, the company had over 400 refrigerated shipping containers in service.

“In March 2014, representatives of Cold Train and Federated Railways Inc. met with BNSF representatives in Fort Worth to discuss the Cold Train’s business and its future with BNSF. At the meeting, BNSF continued to encourage Cold Train and Federated to proceed with the sale. Immediately after the meeting, Federated provided Cold Train a $1.25 million capital infusion based solely on that meeting, and announced that it was acquiring Cold Train,” according to the news release.

Ultimately Federated withdrew its offer to buy Cold Train. Lerner and Lawson contend they had to “walk away with nothing” from a business that had been worth more than $30 million before April 2014.

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Sponsors

Hollister, CA – Berry People has announced the start of its organic strawberry season from Baja California in Mexico, having recently completed a successful first year of operations. These top-quality strawberries,… Read full story →

Texas produce growers are currently harvesting and shipping melons, citrus and other crops to supermarkets mostly throughout the Eastern half of the country. When the Lone Star State producers of… Read full story →